Intrinsic value of Walmart - WMT

Previous Close

$93.11

  Intrinsic Value

$76.42

stock screener

  Rating & Target

hold

-18%

Previous close

$93.11

 
Intrinsic value

$76.42

 
Up/down potential

-18%

 
Rating

hold

We calculate the intrinsic value of WMT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 274.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.40
  4.46
  4.51
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
Revenue, $m
  522,358
  545,655
  570,286
  596,306
  623,774
  652,753
  683,309
  715,513
  749,441
  785,171
  822,787
  862,377
  904,034
  947,857
  993,949
  1,042,419
  1,093,381
  1,146,956
  1,203,271
  1,262,459
  1,324,661
  1,390,024
  1,458,704
  1,530,864
  1,606,674
  1,686,316
  1,769,978
  1,857,859
  1,950,169
  2,047,126
Variable operating expenses, $m
  497,727
  519,844
  543,228
  567,930
  594,007
  621,518
  650,526
  681,100
  713,309
  747,229
  781,116
  818,701
  858,249
  899,852
  943,610
  989,625
  1,038,006
  1,088,867
  1,142,330
  1,198,521
  1,257,572
  1,319,625
  1,384,827
  1,453,332
  1,525,303
  1,600,911
  1,680,336
  1,763,766
  1,851,401
  1,943,448
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  497,727
  519,844
  543,228
  567,930
  594,007
  621,518
  650,526
  681,100
  713,309
  747,229
  781,116
  818,701
  858,249
  899,852
  943,610
  989,625
  1,038,006
  1,088,867
  1,142,330
  1,198,521
  1,257,572
  1,319,625
  1,384,827
  1,453,332
  1,525,303
  1,600,911
  1,680,336
  1,763,766
  1,851,401
  1,943,448
Operating income, $m
  24,631
  25,811
  27,058
  28,376
  29,767
  31,235
  32,783
  34,414
  36,132
  37,941
  41,671
  43,676
  45,786
  48,005
  50,339
  52,794
  55,375
  58,089
  60,941
  63,938
  67,089
  70,399
  73,877
  77,532
  81,371
  85,405
  89,642
  94,093
  98,768
  103,679
EBITDA, $m
  36,735
  38,374
  40,106
  41,936
  43,867
  45,905
  48,054
  50,319
  52,705
  55,218
  57,863
  60,647
  63,577
  66,659
  69,900
  73,309
  76,893
  80,661
  84,621
  88,784
  93,158
  97,755
  102,585
  107,659
  112,991
  118,592
  124,475
  130,656
  137,147
  143,966
Interest expense (income), $m
  2,351
  2,510
  2,809
  3,128
  3,464
  3,820
  4,195
  4,591
  5,009
  5,449
  5,913
  6,401
  6,915
  7,456
  8,025
  8,624
  9,254
  9,916
  10,613
  11,345
  12,114
  12,923
  13,773
  14,667
  15,605
  16,591
  17,627
  18,716
  19,859
  21,060
  22,321
Earnings before tax, $m
  22,121
  23,002
  23,931
  24,912
  25,947
  27,040
  28,191
  29,405
  30,683
  32,029
  35,270
  36,761
  38,330
  39,980
  41,715
  43,540
  45,459
  47,476
  49,596
  51,824
  54,165
  56,626
  59,211
  61,927
  64,780
  67,778
  70,927
  74,234
  77,708
  81,357
Tax expense, $m
  5,973
  6,210
  6,461
  6,726
  7,006
  7,301
  7,612
  7,939
  8,284
  8,648
  9,523
  9,925
  10,349
  10,795
  11,263
  11,756
  12,274
  12,818
  13,391
  13,992
  14,625
  15,289
  15,987
  16,720
  17,491
  18,300
  19,150
  20,043
  20,981
  21,966
Net income, $m
  16,148
  16,791
  17,469
  18,186
  18,942
  19,739
  20,580
  21,465
  22,399
  23,381
  25,747
  26,836
  27,981
  29,185
  30,452
  31,784
  33,185
  34,657
  36,205
  37,831
  39,541
  41,337
  43,224
  45,207
  47,290
  49,478
  51,776
  54,191
  56,727
  59,391

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  213,556
  223,081
  233,151
  243,788
  255,018
  266,865
  279,358
  292,524
  306,395
  321,002
  336,381
  352,566
  369,597
  387,513
  406,357
  426,173
  447,008
  468,911
  491,934
  516,132
  541,562
  568,285
  596,363
  625,864
  656,858
  689,418
  723,621
  759,550
  797,289
  836,928
Adjusted assets (=assets-cash), $m
  213,556
  223,081
  233,151
  243,788
  255,018
  266,865
  279,358
  292,524
  306,395
  321,002
  336,381
  352,566
  369,597
  387,513
  406,357
  426,173
  447,008
  468,911
  491,934
  516,132
  541,562
  568,285
  596,363
  625,864
  656,858
  689,418
  723,621
  759,550
  797,289
  836,928
Revenue / Adjusted assets
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
  2.446
Average production assets, $m
  128,500
  134,231
  140,290
  146,691
  153,448
  160,577
  168,094
  176,016
  184,362
  193,152
  202,406
  212,145
  222,392
  233,173
  244,512
  256,435
  268,972
  282,151
  296,005
  310,565
  325,867
  341,946
  358,841
  376,592
  395,242
  414,834
  435,415
  457,033
  479,742
  503,593
Working capital, $m
  -16,715
  -17,461
  -18,249
  -19,082
  -19,961
  -20,888
  -21,866
  -22,896
  -23,982
  -25,125
  -26,329
  -27,596
  -28,929
  -30,331
  -31,806
  -33,357
  -34,988
  -36,703
  -38,505
  -40,399
  -42,389
  -44,481
  -46,679
  -48,988
  -51,414
  -53,962
  -56,639
  -59,452
  -62,405
  -65,508
Total debt, $m
  52,025
  57,921
  64,154
  70,739
  77,690
  85,024
  92,756
  100,906
  109,492
  118,534
  128,054
  138,072
  148,615
  159,705
  171,369
  183,635
  196,532
  210,090
  224,341
  239,320
  255,061
  271,602
  288,983
  307,244
  326,429
  346,584
  367,756
  389,995
  413,356
  437,893
Total liabilities, $m
  132,191
  138,087
  144,320
  150,905
  157,856
  165,190
  172,922
  181,072
  189,658
  198,700
  208,220
  218,238
  228,781
  239,871
  251,535
  263,801
  276,698
  290,256
  304,507
  319,486
  335,227
  351,768
  369,149
  387,410
  406,595
  426,750
  447,922
  470,161
  493,522
  518,059
Total equity, $m
  81,365
  84,994
  88,830
  92,883
  97,162
  101,676
  106,435
  111,452
  116,736
  122,302
  128,161
  134,328
  140,816
  147,643
  154,822
  162,372
  170,310
  178,655
  187,427
  196,646
  206,335
  216,516
  227,214
  238,454
  250,263
  262,668
  275,700
  289,389
  303,767
  318,870
Total liabilities and equity, $m
  213,556
  223,081
  233,150
  243,788
  255,018
  266,866
  279,357
  292,524
  306,394
  321,002
  336,381
  352,566
  369,597
  387,514
  406,357
  426,173
  447,008
  468,911
  491,934
  516,132
  541,562
  568,284
  596,363
  625,864
  656,858
  689,418
  723,622
  759,550
  797,289
  836,929
Debt-to-equity ratio
  0.640
  0.680
  0.720
  0.760
  0.800
  0.840
  0.870
  0.910
  0.940
  0.970
  1.000
  1.030
  1.060
  1.080
  1.110
  1.130
  1.150
  1.180
  1.200
  1.220
  1.240
  1.250
  1.270
  1.290
  1.300
  1.320
  1.330
  1.350
  1.360
  1.370
Adjusted equity ratio
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  16,148
  16,791
  17,469
  18,186
  18,942
  19,739
  20,580
  21,465
  22,399
  23,381
  25,747
  26,836
  27,981
  29,185
  30,452
  31,784
  33,185
  34,657
  36,205
  37,831
  39,541
  41,337
  43,224
  45,207
  47,290
  49,478
  51,776
  54,191
  56,727
  59,391
Depreciation, amort., depletion, $m
  12,104
  12,563
  13,047
  13,560
  14,100
  14,670
  15,272
  15,906
  16,573
  17,276
  16,192
  16,972
  17,791
  18,654
  19,561
  20,515
  21,518
  22,572
  23,680
  24,845
  26,069
  27,356
  28,707
  30,127
  31,619
  33,187
  34,833
  36,563
  38,379
  40,287
Funds from operations, $m
  28,252
  29,354
  30,517
  31,745
  33,042
  34,409
  35,851
  37,371
  38,972
  40,657
  41,939
  43,807
  45,772
  47,839
  50,013
  52,299
  54,703
  57,229
  59,885
  62,677
  65,610
  68,692
  71,931
  75,334
  78,909
  82,665
  86,610
  90,754
  95,106
  99,678
Change in working capital, $m
  -704
  -746
  -788
  -833
  -879
  -927
  -978
  -1,031
  -1,086
  -1,143
  -1,204
  -1,267
  -1,333
  -1,402
  -1,475
  -1,551
  -1,631
  -1,714
  -1,802
  -1,894
  -1,990
  -2,092
  -2,198
  -2,309
  -2,426
  -2,549
  -2,677
  -2,812
  -2,954
  -3,103
Cash from operations, $m
  28,957
  30,099
  31,305
  32,578
  33,921
  35,337
  36,829
  38,402
  40,057
  41,801
  43,143
  45,074
  47,105
  49,241
  51,488
  53,850
  56,334
  58,944
  61,687
  64,571
  67,601
  70,784
  74,129
  77,643
  81,335
  85,213
  89,287
  93,566
  98,060
  102,781
Maintenance CAPEX, $m
  -9,865
  -10,280
  -10,738
  -11,223
  -11,735
  -12,276
  -12,846
  -13,448
  -14,081
  -14,749
  -15,452
  -16,192
  -16,972
  -17,791
  -18,654
  -19,561
  -20,515
  -21,518
  -22,572
  -23,680
  -24,845
  -26,069
  -27,356
  -28,707
  -30,127
  -31,619
  -33,187
  -34,833
  -36,563
  -38,379
New CAPEX, $m
  -5,182
  -5,731
  -6,059
  -6,401
  -6,757
  -7,129
  -7,517
  -7,922
  -8,346
  -8,790
  -9,254
  -9,739
  -10,248
  -10,780
  -11,339
  -11,924
  -12,537
  -13,179
  -13,853
  -14,560
  -15,302
  -16,079
  -16,895
  -17,751
  -18,649
  -19,592
  -20,581
  -21,619
  -22,708
  -23,851
Cash from investing activities, $m
  -15,047
  -16,011
  -16,797
  -17,624
  -18,492
  -19,405
  -20,363
  -21,370
  -22,427
  -23,539
  -24,706
  -25,931
  -27,220
  -28,571
  -29,993
  -31,485
  -33,052
  -34,697
  -36,425
  -38,240
  -40,147
  -42,148
  -44,251
  -46,458
  -48,776
  -51,211
  -53,768
  -56,452
  -59,271
  -62,230
Free cash flow, $m
  13,909
  14,088
  14,507
  14,954
  15,428
  15,932
  16,466
  17,032
  17,630
  18,262
  18,438
  19,142
  19,886
  20,670
  21,496
  22,366
  23,282
  24,247
  25,262
  26,330
  27,454
  28,635
  29,878
  31,185
  32,558
  34,002
  35,519
  37,114
  38,789
  40,550
Issuance/(repayment) of debt, $m
  5,538
  5,896
  6,233
  6,585
  6,951
  7,334
  7,733
  8,150
  8,586
  9,042
  9,519
  10,019
  10,542
  11,090
  11,664
  12,266
  12,897
  13,558
  14,251
  14,979
  15,741
  16,541
  17,381
  18,261
  19,185
  20,155
  21,172
  22,240
  23,360
  24,537
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  5,538
  5,896
  6,233
  6,585
  6,951
  7,334
  7,733
  8,150
  8,586
  9,042
  9,519
  10,019
  10,542
  11,090
  11,664
  12,266
  12,897
  13,558
  14,251
  14,979
  15,741
  16,541
  17,381
  18,261
  19,185
  20,155
  21,172
  22,240
  23,360
  24,537
Total cash flow (excl. dividends), $m
  19,447
  19,984
  20,741
  21,538
  22,380
  23,266
  24,199
  25,182
  26,216
  27,304
  27,957
  29,161
  30,428
  31,760
  33,160
  34,632
  36,179
  37,805
  39,513
  41,309
  43,195
  45,177
  47,259
  49,446
  51,743
  54,156
  56,691
  59,354
  62,150
  65,087
Retained Cash Flow (-), $m
  -3,496
  -3,629
  -3,837
  -4,053
  -4,279
  -4,514
  -4,760
  -5,016
  -5,285
  -5,565
  -5,859
  -6,167
  -6,489
  -6,826
  -7,179
  -7,550
  -7,938
  -8,345
  -8,772
  -9,219
  -9,689
  -10,181
  -10,698
  -11,240
  -11,809
  -12,405
  -13,032
  -13,689
  -14,379
  -15,103
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  15,951
  16,355
  16,904
  17,486
  18,101
  18,752
  19,439
  20,165
  20,931
  21,739
  22,098
  22,995
  23,939
  24,934
  25,980
  27,082
  28,241
  29,460
  30,741
  32,089
  33,506
  34,995
  36,561
  38,206
  39,935
  41,751
  43,660
  45,665
  47,771
  49,984
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  15,294
  14,973
  14,711
  14,398
  14,030
  13,609
  13,133
  12,604
  12,024
  11,397
  10,494
  9,813
  9,102
  8,371
  7,627
  6,882
  6,145
  5,425
  4,733
  4,078
  3,466
  2,904
  2,396
  1,946
  1,554
  1,218
  937
  707
  521
  376
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company operates through three segments: Walmart U.S., Walmart International and Sam's Club. The Walmart U.S. segment includes its mass merchant concept in the United States operating under the Walmart or Wal-Mart brands, as well as digital retail. The Walmart International segment consists of the Company's operations outside of the United States, including various retail Websites. The Walmart International segment includes various formats divided into three categories: retail, wholesale and other. These categories consist of various formats, including supercenters, supermarkets, and warehouse clubs, such as Sam's Clubs, cash and carry, home improvement, specialty electronics, apparel stores, drug stores and convenience stores, as well as digital retail. The Sam's Club segment includes the warehouse membership clubs in the United States, and samsclub.com.

FINANCIAL RATIOS  of  Walmart (WMT)

Valuation Ratios
P/E Ratio 20.8
Price to Sales 0.6
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 9
Price to Free Cash Flow 13.6
Growth Rates
Sales Growth Rate 0.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.5%
Cap. Spend. - 3 Yr. Gr. Rate -4.1%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 54%
Total Debt to Equity 59%
Interest Coverage 10
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. 11.4%
Return On Equity 17.2%
Return On Equity - 3 Yr. Avg. 18.7%
Asset Turnover 2.4
Profitability Ratios
Gross Margin 25.6%
Gross Margin - 3 Yr. Avg. 25.2%
EBITDA Margin 6.8%
EBITDA Margin - 3 Yr. Avg. 7.1%
Operating Margin 4.7%
Oper. Margin - 3 Yr. Avg. 5.1%
Pre-Tax Margin 4.2%
Pre-Tax Margin - 3 Yr. Avg. 4.6%
Net Profit Margin 2.8%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 30.3%
Eff/ Tax Rate - 3 Yr. Avg. 30.9%
Payout Ratio 45.6%

WMT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WMT stock intrinsic value calculation we used $500343 million for the last fiscal year's total revenue generated by Walmart. The default revenue input number comes from 0001 income statement of Walmart. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our WMT stock valuation model: a) initial revenue growth rate of 4.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for WMT is calculated based on our internal credit rating of Walmart, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Walmart.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of WMT stock the variable cost ratio is equal to 95.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for WMT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Walmart.

Corporate tax rate of 27% is the nominal tax rate for Walmart. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the WMT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for WMT are equal to 24.6%.

Life of production assets of 12.5 years is the average useful life of capital assets used in Walmart operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for WMT is equal to -3.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $77869 million for Walmart - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2952.48 million for Walmart is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Walmart at the current share price and the inputted number of shares is $274.9 billion.

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